Amid EpiPen Furor, a CEO Shows How Not to Swim Against the Tide

Lifeguards know a little secret that saves lives. When a rip current is pulling you out to sea, stop fighting it and just swim parellelto beach. Soon, the current will shift and you'll reach the beach without exhausting yourself or drowning.

That's the lesson in the way drug maker MylanNV CEOHeather Breschhashandled the outrage toward her company's pricing of the Epipen, the quick doseof epinephrine used so frequently now by people to stop allergic reactions. Rather than swim against the currentcriticism, she is slowly, but purposefully, swimming along, hoping to change the narrative.

First, the background.Back in2007, when Mylan acquired the rights to the Epipen, a constant companion of parents with children with nut allergies or those who are allergic to bug bites, the cost was about $94, according to data from Elsevier Clinical Solutions. Nine years later, it's above $600.

Unsurprisingly, thatthrust Mylan into the public rogue's gallery of "greedy" drug makers likeTuring pharmaceuticals and Valeant pharmaceuticals who have been accused of jacking up drug prices, whichkeep important, life-saving treatments out of the hands ofpatients who need it. profits over people, as the slogan goes.

The truth,as is often the case, is not that simple. 58003 As anyone who has ever sold a product knows, the end price needs to take distribution and other factors into consideration. In the case of a drug,there are additional layers that touch the product and add cost: wholesalers, distrubutors. pharmacy-benefit companies, retail pharmacies, etc.Epipens, and Bresch says,the $608 price tag brings in $274 to Mylan. The rest goes to all the middlemen, she says.

In fact, rather than wanting to raise prices, Bresch says she wishes she could lower the cost, but she can't without risking the profits needed to keep Epipens on the market. "No one's more frustrated than me," she told CNBC. "Everybody should be frustrated."

So, rather than fight the mob, Mylan's crisis response has been to pick up its own torch and pitchfork and join it. That's smart, since it is difficult to fight the popular opinion that all companies -- and drugmakers in particular -- are more about profitability than patient outcomes. It isn't surprising that most of theloudest criticism has come from the Democratic side of the aisle in Congress and from Hillary Clinton on the campaign trail. (Epipen spokeswoman Sarah Jessica parker has also distanced herself, but I'm not sure whether that is a plus or minus, or even matters at all.) To most of these critics, capitalism has replaced Freemasons and Jesuits as the convenient villains behind every problem or conspiracy.

Mylan's spin to populism can't last unless itpivots effectivelyto target more villains. pointing out the hypocricy ofgovernment at large, and Congressional critics in particular, has to be part of any plausiblecrisis response. Obamacare plans havehigher deductibles and lower drug benefits. Those planshave played a role in our understanding of -- and sting from -- drug prices.

Recall that pharmaceutical companies chose not to fight Obamacare in 2009 under a deal where it could have more latitude with prices. While Obamacare in theory provided coverage to millions of people who couldn't get insurance under the old system, it also made the out-of-pocket costs higher. people with private insurance (otherwise known as those folks who liked their doctors and were actually allowed to keep them) are paying the copays they've always paid for Epipens. Many people with private insurance don't even blink about the actual price of drugs unless they aren't covered. Taking the fight to one of the causes -- the lawmakers who are heaping criticism on the company right now -- might seem risky, but, in a political season where no one trusts politicians, it helps Mylan and Bresch reshape the narrative. (Bresch, incidentally, is the daughter of one of these potential targets, West Virginia Democratic Sen. Joe Manchin.)

58003 Nothing brings prices down like free-market competition, but the Food & Drug Administration has blocked or slowed most competitors to the Epipen. I'm sure Mylan is quite happy tohave the competition, but prices are a function of markets, and monopolies have a way of screwing consumers. Mylan should message to the world that it wants free-market, entrepreneurial competition to help battle the structural inefficiencies in the market and regulatory structure to bring down prices for consumers.

58003 Changing the narrative is the first step to any effective crisis response, and there are enough bad guys to go around when it comes to the costs in our health care system. Bresch should double down on that approach and start leading the national conversation more, rather than drowning in politcally charged criticism. That wouldbe the best prescription forMylan, its shareholders, its patients and the American capitalist economy.

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